Skip to main content

tv   Nightly Business Report  PBS  September 22, 2015 1:00am-1:31am PDT

1:00 am
"nightly business report" with tyler mathisen and sue herera. >> 5,000% increase. why a 62-year-old drug that once cost $13 a tablet just got a lot more expensive. and what one presidential hopeful is saying about it. diesel deception. volkswagen shares plummet. sales of several popular models are suspended as the department of justice reportedly targets the automaker in a criminal investigation. hack attack. why even the most valuable company in the world is not immune. all that and more tonight on "nightly business report" tonight for september 21st. good evening, everyone. and welcome. volkswagen may face u.s. criminal charges over claims it cheated on emissions tests.
1:01 am
more on that story in a moment. but we begin tonight with a decline in the biotech sector. the decline in that sector, its worst of the year, was fueled not by a failed drug trial but by presidential hopeful hillary clinton. the nasdaq biotech index fell about 4 1/2% after clinton said in a tweet that as president she'd crack down on what she sees as price gouging in the pharmaceutical industry. she promised more details tomorrow. now, those comments were in response to a report in the "new york times" of a 5,000% price increase, virtually overnight, in a 62-year-old specialty drug. now, we've talked a lot about the high cost of breakthrough new drugs coming to market. but as meg tirrell reports, older drugs aren't immune. >> reporter: for a small company it's making big waves for the drug industry. turing pharmaceuticals, a private company founded by a former hedge fund manager, is
1:02 am
the target of outrage over the price of its drug deraprin. the medicine cost $13.50 a tablet before turing acquired the drug from another company in august. now it costs $750 a tablet. that's a 5,000% price increase overnight. >> we're trying to keep our secret stash somewhere but it's been hard for hospitals and clinics to get access to the drug particularly because their budgets were simply not prepared for such an incredible price increase. >> reporter: dr. carlos del rio treats patients with hiv/aids who are among the groups who can find themselves in need of deraprim. the drug treats a parazittic infection that can arise in people. the infectious disease society of america wrote a letter to turing this month urging the company to adjust the price citing no justification for an increase of this size for a drug approved in 1953. turing's ceo martin shkreli says the price increase will enable
1:03 am
development of a newer better drug for the infection and that turing brought daraprim with those plans in mind. >> we definitely planned on raising the price. that's for sure. we paid a very, very large amount to buy an unprochtable medicine we can't continue to make to lose money on the drug at that price. >> reporter: the controversy ignited monday morning when presidential candidate hillary clinton tweeted about the price increase, calling it an example of outrageous price gouging of specialty drugs. and pledging to lay out her plan issue tomorrow. drug companies' stocks sank highlighting fears across the industry about pricing pressure. bernstein analyst ronnie gao says folks are worried that hillary clinton if elected could give the u.s. government the ability to negotiate on drug prices. he says this could cut drug industry stock price by 20% across the industry. other analysts disagree, like rbc's michael yee. he says that's unlikely. >> hillary obviously has a huge platform and someone who has been going after drug pricing for a decade. and this has been a very sensitive topic and people think
1:04 am
that obviously hillary could have some clout here. i think the real question is what if anything could actually be implemented or approved given that there is a legislation process that has to go through congress. >> reporter: as for turing, when asked if all the attention will lead to lowering the cost of daraprim, the ceo had one word. no. for "nightly business report," i'm meg tirrell. >> our guest tonight is offering up a solution he thinks could help control the cost of drugs here in america. he is zeke emmanuel, vice provost for global initiatives and chair of medical eth ixz and health policy at the university of pennsylvania. welcome. nice to have you with us tonight. >> nice to be here. >> you cite the swiss method and also the australian systems method of setting prices for drugs. why those two in particular? >> well, i just observed that other developed countries, almost all other developed countries, have dealt with the
1:05 am
problem of drug prices and they've dealt with them in ways of either setting prices as australia has a single buying for the whole country and that organization, the pbs, buys for everyone and therefore can set the prices. and in switzerland they set a cap on the maximum value of prices. i wanted to lay out what the policy options are that other countries landed on rather than endorse a single one. i think we probably in the united states can get to a solution before we get there. but we should be aware that countries we admire, countries that often laud their health systems, do this. but our history, mr. manuel, respectfully, is we don't tend to go for single buyers or single payers nor do we like the hand of government coming in and setting a -- >> i agree -- >> go ahead. >> we cannot do but we often regulate utility prices. we have review of health insurance company prices in the affordable care act we have this medical loss ratio which said that you have to spend a certain
1:06 am
percentage of your premium on health care and not on administrative costs. so we have at various points for very essential items like drugs, like utilities, actually done some regulation of the pricing and remember, republican presidents have also introduced price controls when prices were out of control at various points. and this kind of example of the single drug for toko plasmosis does seem to be a case where the drug pricing is out of control and there really is absolutely no justification. there's no new resrch that was funded. there's no new formulation. there's no shortage of the drug. >> do you get the sense now with this example that meg tirrell just profiled to us in mind, that we are at a tipping point in this whole -- >> i do think the public is pretty -- i do think the public is pretty outraged. and we should say, this is only one of about five or six generic drugs where the prices shot up
1:07 am
recently. doxocyclin, an antibiotic, is another example. several cardiac drugs also are cases where the prices have been escalated. even though they're totally generic drugs. i do think the public is upset and wants real solutions, not just sort of pseudo solutions. >> the pharmaceutical business is one of the most powerful lobbies, which is not a reason not to do something, mr. manuel, but they have been successful in defeating the idea that medicare would be able to negotiate the prices of drugs. you don't see that as a solution or a helpful move at all. would you explain that? >> well, you need certain things before the medicare negotiation makes any sense, one of which is you actually need a formulary so you can exclude a drug where you can't negotiate a good price. but the second thing is medicare pricing only covers 50 million americans. there are 170 million americans who don't -- who have private insurance and it's likely that if medicare drives the price
1:08 am
down for medicare patients the price for private insured patients would go up. so that's not a solution to the problem. that's a solution to the problem for a few people but not the whole country. and i would make a second point that this drug which we're talking about today is not really a drug for medicare patients, it's a drug for a lot of people under 65. and so therefore it's -- it probably won't even affect this drug. sxm of the highest priced drugs. like the drugs for cystic finerofine ro finerose fibrosis or cancer are not targeted at medicare parkts. are not a comprehensive solution. one thing we need is a comprehensive solution. >> it certainly is a discussion that's going to be ongoing. thank you, mr. emmanuel. zeke emmanuel with the university of enpen. ty? now to volkswagen which is the target of a criminal probe apparently by the department of justice related to the gaming of emissions tests. we first reported that story
1:09 am
friday. the stock, which trades in germany, plummeted more than 20% monday. this after the company didn't contest reports that it rigged diesel cars with software that could fool government emissions testers. the software then turned off the emissions controls in normal driving, improving engine performance but also spewing much more pollution. and in a rare move the automaker said it would halt sales of the affected vehicle. the scandal has volkswagen ceo martineo wintercorn preparing f a difficult board meeting later this week. there he'll be asked how volkswagen could have used software that turned on emission controls during testing in the united states and then turned off those controls during normal driving situations. winterkorn apologized sunday because the company had "broken the trust of our customers and the public." but while some analysts have said winterkorn's run at ceo
1:10 am
could end because of the scandal, at least one expert says the company hasn't admitted that it did anything wrong. and it may take a while before it can figure out whom to blame. >> the real crux of this is did they do something completely wrong and how many people knew about it? and my guess is that it doesn't go all the way up to the ceo. the cases i've written about this it usually does not. once that's resolved then they can move beyond it. >> volkswagen's ability to move beyond the scandal may determine this year's number one automaker. only about 3 1/2% of volkswagen's business takes place in the united states. but right now volkswagen's 2015 worldwide sales are barely ahead of toyota's. and for now u.s. sales of its passat, jetta, golf, beetle and audi a3 diesel models are on hold. those models account for about a quarter of the company's consumer business year.
1:11 am
gm managed to put up record worldwide sales last year even after the deadly ignition switch recalls began. and toyota recovered very quickly from a scandal involving unintended acceleration a few years ago. >> in terms of sales i think it will have an effect. i think there will be some people who look at it and say i don't trust the company anymore. but when you think of how many vehicles have been recalled in the last five or six years, the numbers are staggering. more cars, you know, recalled from gm than they made. i think people start to -- the eyes glaze over after a while and they won't even be able to keep track of who did what. >> well, despite being the center of controversy, volkswagen is going ahead with a scheduled event tonight in brooklyn, new york where the ceo of volkswagen america will be in attendance. phil lebeau is also there. phil, i'm sure the company doesn't want to address this, but do you think they will at the event tonight? >> i think michael horn, who is the ceo of volkswagen of america, will at least touch on the subject during prepared remarks at this event where they're going to be unveiling
1:12 am
the refreshed version of the passat. now, whether or not he takes questions from reporters isn entirely different question. i suspect that he may duck those questions and he may just briefly touch on it during prepared remarks. >> phil, they said they're going to halt the sales of certain models involved in recall. obviously, these would be the new cars. how unusual a move isthat? >> very unusual. it's only done when automakers realize if we sell this model we are breaking the law, we know that there is a defect or a severe problem with a particular vehicle and it is not being sold in good faith. what's interesting about this is how long this goes before they can resume sales of those models. again, it's only about a quarter of the vehicles that volkswagen sells in the united states. but diesel models are incredibly important, especially to vw dealers on both coasts and especially in california. >> absolutely. what about congress, though? when we hear things like this, they tend to call hearings. are you expecting that?
1:13 am
>> yep. the energy and commerce committee has already said in the coming weeks there will be some type of hearing. we've seen this script play out with gm and toyota, sue. expect the same thing with volkswagen. >> phil, thank you. we know you'll be covering it for us. phil lebeau in new york. despite that pullback in d you aboutcks we t earlier the major averages started the week with gains. the dow jones industrials up 125 points to 16,510. the nasdaq blazed higher by a full point. look at that. almost two points. and the s&p 500 ended nearly nine points higher. investors were also paying attention to comments from federal reserve officials. today the president of the st. louis fed said it's time to increase interest rates. james bullard, one of the first fed executives to speak since the policy-making meeting last week, is not a voting member. but he says he would have dissented with the central bank's decision to leave rates near zero. >> policy settings are an emergency. and the economy itself, the goals of the committee have
1:14 am
essentially been met. you know, unemployment's 5.1% and inflation, which is being driven down by oil right now, but if you strip that out and look at the dallas fed, the inflation's about 1.6% year over year. that is about as close as we've been to our goal variables in 50 or 60 years. so the prudent thing to do is to start to inch your policy lovers back to some kind of normal readings. >> separately dennis lockhart, the president of the atlanta fed, said he expects the central bank to raise rates at some point this year. >> that data-dependent fed is likely taking notice of the latest read on housing which wasn't particularly pretty. existing home sales fell more than expected back in august, making it the first drop in four months. higher prices partly to blame. but as diana olick reports, a change in the lending landscape may also be keeping some buyers locked out of home ownership. >> reporter: the autumn chill came early to the housing market this year. august home sales dipped nearly
1:15 am
5%. that was well below expectations and a wider than usual monthly move. sales fell worst where prices rose the most, in the south and west. >> as the prices rise and hurt affordability, home buyers are pulling back. >> reporter: realtors point to very weak demand among first-time home buyers, who have a harder timesaving for down payments and meeting credit score requirements. fha is usually their loan of choice but the nation's big banks have all but gotten out of the business because they keep getting sued by fha. >> i believe this you will have a measurable impact in holding back some of the first-time buyers. >> reporter: chase mortgage, which is the nation's second largest lender, is not even in the top 100 of new fha originators. they and other big banks pulled way back after all kinds of new regulations raised their risk of getting sued. >> when we look at fha it's the servicing we're concerned about.
1:16 am
when i talk about servicing, you've got to remember, in the last couple years there's been about 13,000 pages of new regulation. if you were to stack that up that's about 5 1/2 feet high of new regulations that come in, all primarily focused on default servicing. >> do you even want fha loans anymore? >> fha requirements are down to a 520 fico, and you only have to put 3 1/2% down. that's subprime lending. and we're not in the subprime lending business. >> chase will still do some fha loans but only at much higher fico scores and a much higher cost to borrowers. so really, why would they want them? independent lenders are picking up the slack, but some say the damage is already done. for "nightly business report" i'm diana he will o'ic in wal'i washington. lennar topped expectations. the home builder cited higher priche and an increase in deliveries and a rise in new orders. steady job growth have helped. the ceo said both the new home and the rental market have
1:17 am
significantly pent-up demand. two big landlords are get together as the market for rentals stays hot. starwood way-point residential trust will combine with colony american homes in a deal that values colony at about $1.50 billion. the two companies are owners of single-family home rentals. starwood way-point rose nearly 13% today. and the amount people spend on rent is expected to increase. a lot. according to researchers at harvard university, the number of u.s. households that spend at least half of their income on rent is expected to increase by 25% over the next decade. the general rule of thumb is that households should not spend more than 30% of income on housing. and still ahead, why not even the world's most valuable company is immune from hack attack. ♪
1:18 am
it's been called the first of its kind security breach. hackers were able to penetrate apple's app store. the company says it pulled some apps after discovering malicious malware. despite the discovery shares of apple were up 1 1/2% today. josh lipton reports on this vulnerability and whether it's possible others exist. >> reporter: when it comes to hack attacks, even the most valuable company in the world isn't immune. hackers have made their way into apple's app store. they targeted some of the most popular apps in china, including messaging app we chat as well as the ride-hailing app did didi xuxing. >> this is the first sort of broad attack they've experienced where lots of applications were all affected and those apps made their way onto the phone.
1:19 am
it's never happened with ios. that sort is the first big crack in the giant armor that is the app store that has kept so many users safe for so long. >> reporter: here is how the hack worked. apple provides developers with a set of tools to create apps. one of which is called xcode. in china some developers used a counterfeit version of xcode because it downloaded more quickly. hackers were then able to modify this counterfet version and plant malicious code onto the apps. and once downloaded, these compromised apps could prompt fake alerts to fish for user data or exploit vulnerabilities in the ios system. >> that's a technique which hasn't been used against the app store before, and now that people are aware of it i fully expect other attackers to try and exploit the same hole, to target developers so they can eventually get into the app store. >> reporter: apple has removed the apps created with this counterfeit software and no user data is known to have been stolen. security professionals say the best and simplest way users can
1:20 am
protect themselves, always download the latest version of an app. that way users know they're relying on the most up-to-date safeguards. for "nightly business report" i'm josh lipton in san francisco. a multibillion-dollar deal is where we begin tonight's "market focus." dialogue semiconductor is buying atmel corporation in a deal valued at nearly $5 billion. atmel will provide the firm with a larger portfolio of products and a bigger sales channel. shares of atmel surged 12 1/2% to 819. the oil and gas producer danbury resources announcing it is suspending dividend payments starting with the fourth quarter in an effort to save gas. it comes as the entire industry works to battle the effects of slumping crude prices. shares rose more than 1% to $2.94. tribune publishing saw its shares tumble after the company which owns the l.a. times lowered its earnings and revenue outlook for the year. the company blamed results in
1:21 am
southern california for that forecast. shares slid more than 17%. they closed today at $8.75. and macy's says it plans to add 85,000 seasonal workers for the holidays. the number is slightly lower compared with last year. shares were off a fraction to 53.91. and for a full list of who's hiring for the holidays, head to our website, nbr.com. >> i can't believe we're talking about the holidays already. coming up, economic ties that bind. the thorny issues that the world's two biggest economic powers will discuss when they meet this week.
1:22 am
here is what to watch tomorrow. shareholders will vote on whether or not to strip bank of america ceo brian moynihan of his title as chairman. the ceos of anthem and aetna will testify on capitol hill about the proposed mergers. and the chinese president arrives in the u.s. for a state visit. and that is what to watch tuesday. greeks gave alexis tsipras a second chance, voting to re-elect him as the country's prime minister in the snap elections on sunday. but the country's dire economic issues remain the same. julia chatterly reports from athens. >> reporter: thunder and lightning here in athens greet the new greek government led by alexis tsipras, who once again gets a chance to lead this country. it's almost like the last 7 months never happened, as long as you forget the capital controls and the fact that a third bailout deal was signed. alexis tsipras of the syriza party deciding to join in a
1:23 am
coalition once again with the independent greek party, destroying any hopes of him choosing more centrist, more reasonable parties to form a government with. i went out in athens earlier today and spoke to a number of greek people to understand why they gave him a chance, a second chance at leading this country. >> i vote for him and i trust personally him and then his party. >> why? because he signed the third bailout deal. didn't he let you down? >> yes. but he tries. the other parties i think they wouldn't try at all. >> reporter: do you trust alexis tsipras to do a better job second time around? >> even if i did, i wouldn't trust the -- his co-workers. >> reporter: greece's creditors and the greek people will hope the stormy skies we see tonight aren't a sign of things to come.
1:24 am
greece now got a deadline. 9 2k5 95 days to work out over half of the reforms attached to this bailout deal. we're talking thorny issues like pension reform, tax reform, bank bailouts and of course the key priority for this government, debt negotiations. they want to reduce the debt burden on this country. let's hope that alexis tsipras can use his second chance and use it wisely. for "nightly business report" i'm julia chatterly in athens. well, as i just mentioned a few moments ago, china's president xi jinping comes to the united states this week for a state visit. the bilateral issues are plentiful and thorny. eunice yoon reports from beijing. >> reporter: the chinese president is headed to the united states at an especially tense time between washington and beijing. the white house is agitated over alleged cyber tacks from china and is considering sanctions against chinese individuals and companies that it believes could
1:25 am
be engaged in corporate espionage. china is asserting itself much more in the south china sea and that's raising tensions with american officials who's become much more protective of their key allies as well as the shipping lanes there. the chinese president xi jinping is also heading to the united states at a time when he's appearing much more vulnerable on the economy. u.s. investors have been questioning china's growth and also the government's commitment to market reform. the chinese president is going to start off the seven-day visit in seattle, where he's going to be touring boeing as well as microsoft's facilities. he's going to be meeting with several important tech ceos including tim cook and finally toward the end of the week he's going to be meeting with the u.s. president barack obama for a state dinner at the white house, and he's also going to be capping off his week at the united nations for his first speech there. the buzz here is that there could be an agreement or at least some progress made on a bilateral investment treaty between the united states and china and also that there could be some issues resolved on cyber
1:26 am
security. for "nightly business report" i'm eunice yoon in beijing. >> love to be a fly on the wall for those discussions, wouldn't you? >> absolutely. and what a busy week it's going to be. with the pope coming and the head of china coming. >> and the u.n. delegation. be glad you're not here. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we'll see you right back here tomorrow night. ♪
1:27 am
1:28 am
1:29 am
1:30 am
announcer: "imagemakers" is made possible by the members of kqed. woman: flight 453 boarding gate 31.

30 Views

info Stream Only

Uploaded by TV Archive on